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Understanding Reimbursement Changes for Joint Replacements

Learn about the bundled payment and comprehensive care for joint replacements, including the reimbursement changes and key success factors. Explore opportunities and next steps in adapting to the new payment model.

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Understanding Reimbursement Changes for Joint Replacements

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  1. Bundled Payment and Comprehensive Care for Joint Replacements (CJR) Understanding Reimbursement Changes June 21, 2016 Mark Besch VP Clinical Services Aegis Therapies mark.besch@aegistherapies.com

  2. AGENDA • What is Bundled Payment? • Care Redesign • Care Coordination for Joint Replacement • Now What • Keys to Success • Opportunities • Next Steps

  3. What is Bundled Payment? • A single payment to providers for defined services over a defined period of time. Might also be called episode –based payment; episodic payment; case rate; packaged pricing; • A number of models implemented over past 3+ years • CMS Bundled Payment for Care Improvement • Model 1, Model 2, Model 3, Model 4 • Variable length episodes of care • Voluntary Program • Accountable Care Organizations • Comprehensive Care for Joint Replacement • Most bundled payment models are “restrospective”. This makes it possible to build bundled payment on a fee-for-service base, “truing up” when the episode is over.

  4. Goals of Bundled Payments • Promote quality and financial accountability of care • Reduce Medicare expenditures while preserving or enhancing the quality of care • Alignment of financial and other incentives for all health care providers and suppliers during an episode • Improve coordination and transitions of care • Advance the mission of Center for Medicare and Medicaid Innovation (CMMI) and the Secretary’s goal of increasingly paying for value rather than volume

  5. How is care delivery different? • Episode owners are responsible for costs of all care provided, regardless of provider and setting • Requires much more coordination and collaboration • Keys to success: • Control Cost • Manage LOS • Reduce re-hospitalization • Maintain Quality • Demonstrate meaningful value

  6. Care Redesign – What does it mean? • How is care delivery ifferent? • Patients are likely to transition through care settings faster • A single care setting will not necessarily need to meet patients’ every rehab need • Care likely will need to focus on certain specific skills or abilities to enable the next transition • Be aware of the patients’ episode goals, and • Identify your part in that episode • Focus efforts at removing the barriers preventing transition to the next care setting

  7. Care Redesign – What does it mean? • CMS believes that the CJR model will incentivize hospitals and PAC providers to: • Focus on the patient’s experience throughout the episode of care by collaborating and coordinating the services that are delivered so that they can demonstrate value by providing that care in the most efficient setting while still achieving the patient’s goals. Acute IRF OP SNF HH

  8. Comprehensive Care for Joint Replacement (CJR) • Retrospective bundled payment model for • Projected to save $343 million over 5 year period • There are 430,000 TJRs in DRG 469 and 470 per year costing Medicare $7 billion per year • Implementation began April 1, 2016 • With few exceptions, participation is mandatory. Unlike all other existing bundled payment models • Applies to all acute care hospitals furnishing the services in 67 selected MSAs (approximately 800 hospitals in 33 states) • Goals • Aims to support better and more efficient care for beneficiaries undergoing the most common inpatient surgeries – hip and knee replacements • Tests bundled payment and quality measurement for an episode of care associated with hip and knee replacements to encourage hospitals, physicians, and PAC providers to work together to improve quality and coordination of care from the initial hospitalization through recovery

  9. CJR – Summary of Key Provisions • Involves two DRG groups: • 469 major joint replacement or reattachment of lower extremity with major complications or co-morbidities (MCC) • 470 major joint replacement or reattachment of lower extremity without MCC • Episode initiated with admission to hospitals for lower extremity joint replacement (LEJR) procedure assigned to DRG 469 or 470 • Episode ends 90 days after discharge from the acute care hospital and includes the acute hospital claim costs • Episode includes LEJR procedure, inpatient stay and all related care covered under Medicare Parts A and B within 90 days after discharge including hospital care, post-acute care and physician services.

  10. Services included in the Bundle • The following categories of items and services are included in the episodes: • Physician services • Inpatient hospital services (including hospital readmissions) • Inpatient psychiatric facility (IPF) services • Long-term care hospital (LTCH) services • Inpatient rehabilitation facility (IRF) services • Skilled nursing facility (SNF) services • Home health agency (HHA) services • Hospital outpatient services • Outpatient therapy services • Clinical laboratory services • Durable medical equipment (DME) • Part B drugs • Hospice services

  11. CJR – Summary of Key Provisions • Participant hospitals in selected markets would be episode initiators and bear financial risk • Risk bearers cannot be non-Medicare providers (companies such as Remedy Partners, naviHealth, Signature Medical and others) • Retrospective annual reconciliation against a target price. Upside opportunity for years 1-5; downside risk only for performance years 2-5. • CJR hospitals will receive separate episode target prices for DRG 469 and 470 reflecting difference in spending and will use risk stratification methodology to set different target prices for patients with hip fracture within each DGR due to significantly higher spending associated with these more complicated cases.

  12. CJR – Summary of Key Provisions • Target prices will reflect a blend of historical hospital specific and regional spending with regional component increasing over time • The target price will include up to 3% discount to Medicare representing their upfront savings and the pool from which incentive dollars to top-performing hospitals will be paid. • Payment eligibility dependent on performance on three hospital-based quality measures • Complication measure - hospital level complication rate (RSCR) following elective primary THA and/or TKA • Patient experience survey measure – HCAHPS survey • Voluntary data submission – patient reported outcomes (PRO)

  13. CJR – Summary of Key Provisions • Following completion of a CJR model year, participant hospitals that achieve actual episode spending below the target price and achieve minimum composite quality scores will be eligible to earn a reconciliation payment for the difference up to a cap: • Up to 5% of the target price in years 1 & 2, 10% in year 3 and 20% in years 4 & 5 • Hospitals with episode spending that exceeds the target price will be financially responsible for the difference to Medicare up to specified repayment limits: • No repayment responsibility in performance year 1 • 5% in performance year 2 • 10% in performance year 3 • 20% in performance years 4 & 5

  14. Quality Measures The CJR program will implement quality performance standards that must be met for the hospitals to receive reconciliation payments.

  15. Quality Measures The hospital’s composite quality score is a summary score reflecting performance and improvement on two measures

  16. Quality Measures • Composite scoring methodology determines • Hospital eligibility for reconciliation payments • Amount of quality incentive payment that may be made to hospital • For Performance Year One:

  17. Quality Measures For Performance Years 2 and 3: For Performance Years 4 and 5:

  18. CJR – Summary of Key Provisions • Beneficiary protections • Retain the right to obtain care from any qualified Medicare provider • Beneficiaries are automatically included in the model and cannot opt out. Also cannot opt out of data sharing. • Hospitals must provide written information • Beneficiary exclusions • Medicare Advantage members • ESRD • Medicare is secondary payer

  19. CJR – Summary of Key Provisions • Waivers related to SNFs and physicians will be available • Beginning Jan, 2017, the 3-day stay waived for SNF admission providing the SNF is 3-star or higher at the time of hospital discharge and for 7 of prior 12 months; • Telehealth waivers; • Home visit supervision waivers • Gainsharing agreements with PAC providers are allowed, within limits

  20. Why Is This Important?

  21. Where is This Going to Happen?Revised from 75 MSAs to 67 • Insert map here

  22. 67 MSAs

  23. Episode Costs – Average Medicare Payment per CJR Episode

  24. Now What? What Does it all Mean? • The mandate to hospitals is clear – Reduce costs and Maintain or Improve Quality • Reduce Costs – possible strategies • Careful selection of PAC providers • Actively manage LOS • Increased focus on avoidable readmissions • Shift in discharge patterns / PAC utilization • Maintain/Improve Quality – possible strategies • Actively encourage patient choice • Establish quality performance expectations • Offer downstream clinical support • Manage downstream escalations • Care pathways

  25. Now What? What Does it all Mean? • A hospital’s financial performance may be highly dependent on downstream care – hospitals will care more where their patients go • Expect hospitals to establish performance metrics / scorecards • Length of Stay • Readmission Rates • Patient Satisfaction • Staffing levels • Rehabilitation Services availability • Patient Outcome Measures

  26. Now What? What Does it all Mean? • Some hospitals will pursue risk-sharing agreements • To share upside gain or downside risk, hospital and PAC partners must have formal agreements that abide by certain restrictions • Providers must furnish billable services • Gainsharing payments must be partly based on quality metrics set by hospital • A single PAC provider cannot ‘pay’ more that 25% of total repayment required • According to Avalere, the launch of CJR marks a shift in how CMS is approaching alternative payment models, and providers everywhere should take note, even if bundled systems are not yet required in their markets or settings. • Industry analysts, including Avalere, report that in the final year of the Obama Administration, they expect CMMI to develop more mandatory models, similar to CJR as they look to accelerate the transition to value-based care.

  27. Keys to Success • Meet with hospitals to understand their approach to CJR • Some taking a wait and see approach • Others already making network selections based on prior history • What are your hospitals doing? • Analyze utilization data • Number of target procedures at hospitals • Where have hospitals discharged these patients? • Has that pattern changed? • Your risk or opportunity

  28. Aegis Support Tools

  29. Aegis Support Tools

  30. Keys to Success • Understand market dynamics and your position in the marketplace • Identify what you have to offer the hospital • Know your key metrics • Medicare LOS • Readmit % • 5-star score • Average SNF episode cost • Readmissions will be a major driver of CJR episode costs – requires high focus to manage and reduce

  31. Identify Opportunities • Help with Patient Placement • Hip fracture patients with THR will have higher target prices. • Higher target price makes SNF stay less likely to drive episode overuns • Develop and demonstrate high capabilities with these more fragile patients • Help organize a Post-Acute Network • Partner with other PAC providers (other settings) to facilitate smooth, safe and efficient transitions • Need to avoid downstream ‘system contacts’ (hosp, ED)

  32. Identify Opportunities Learn and Understand Hospital ‘Pain Points’ and Needs • Need for high quality post-acute partners • Hospitals are often unaware of PAC utilization patterns (Advisory Board) • “Hospitals don’t know where their patients go after they are discharged. Their success under CJR will hinge on being able to track patients and partner with high-performing post-acute care providers.” (Avalere report, March 30, 2016) • Develop and offer Clinical Pathways • From a medical management perspective, joint replacement peri-operative clinical pathways result in better outcomes that are achieved faster and at lesser cost (J Orth Surg, JAMA) • Be innovative • Offer Prehab services • Be active in or even provide the care coordination

  33. Aegis 90-day Milestone Pathway

  34. Aegis 90-day Milestone Pathway

  35. What Can You Leverage? • Any bundled payment experience in Model 3 and Model 2 • Any ACO experience • Clinical pathways - be innovative • Care redesign approaches and the use of accelerating systems to process patients through more rapidly • Attending M.D.s connected with the hospital collaborator • Demonstrated positive outcomes • IT experience and capabilities (e.g., 90-day tracker) • Existing PAC provider partnerships

  36. What Is Financial Success in CJR? • Increased volume as measured by admissions • 3-day stay waivers can bring incremental volume – 3-star and above facilities • Opportunity to accept risk-gain share dollars are voluntary (new money is available in reducing readmissions) • Demonstrate strong transitions of care to reduce readmissions • Understand and support key hospital metrics – e.g., LOS, re-hospitalizations • Eagerly support the hospital quality measures

  37. Next Steps/Needs • Communication with hospitals • Assess readiness for care redesign strategies • Clinical Pathways • Develop operational plan/model that incorporates the use of care coordination and communication strategies with the hospital • Consider risk-bearing capabilities • How will you demonstrate value?

  38. Resources List of selected geographies and participant hospitals • https://innovation.cms.gov/initiatives/cjr MedLearn Matters article (MM9533) www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9533 Mark Besch VP Clinical Services Aegis Therapies mark.besch@aegistherapies.com

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